Our chart of the week shows the "gold stock divergence" we highlighted months ago is still in place.
For much of 2010, gold stocks and the broad market increased at roughly the same pace. Then, when the market stumbled in April, the two diverged. The broad market kept falling. But gold stocks remained solid, supported by the incredible strength in gold.
As you can see from the "performance chart" below, this divergence is still in place. Gold stocks (the black line), are showing positive returns and climbing. The S&P 500 (the blue line) is showing negative returns and falling.
Gold stocks are typically viewed as a riskier asset… so it's incredibly bullish action for them to remain so steady in the face of terrible stock market weakness. Stay long "the golds."
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